How to Not Mess Up Your Dutch Mortgage Application

Special thanks to MV Works International for helping us with this article.

Are you searching for a mortgage? Oftentimes, this is the first step in the home-buying process. Understanding how much you can borrow is crucial to understanding your buying options. The interesting thing about the Netherlands is that, generally, there is no pre-approval for a mortgage. The mortgage is approved at the time of the house purchase once the buying contract has been signed. To avoid nasty surprises at such a later stage in the game, we put together this handy guide for internationals to help avoid messing up the mortgage process.

Honesty is the Best Policy (also with yourself!)

Like anything in life, honesty is usually the best approach, especially when it comes to your mortgage advisor. Lying on an application can get you in serious legal trouble and lead to a mortgage being rejected at the time of application. Additionally, not being truthful and being caught can affect future mortgage applications. Lenders can check a lot of the information you provide. The Netherlands is very well organized, and transparency is at the heart of the country’s legal and financial system.

Be Honest With Yourself

It is also important to also be honest with yourself. Although you are obligated to provide a list of all your debts or obligations worldwide, lenders cannot check in most countries. Thus, you may end up with too many financial obligations, which can lead to not being able to meet them.

Get The Documents Right!

Ensuring all ID documents are current is crucial when applying for a mortgage. Pay close attention to the expiry dates on passports and confirm that residency permits are up-to-date, particularly for couples. These seemingly minor details can lead to significant delays or complications in the mortgage approval process if overlooked. Also, standard employer Statement model forms like that from the NHG may change from year to year, so it’s important to have the latest ones. Being diligent about document validity can help you avoid unnecessary hurdles and keep your mortgage application on track. A good mortgage broker will usually ask up front for all the documents to spot any issues.

Don’t Trust Mortgage Calculators

There are loads of mortgage calculators online because they are powerful marketing tools. So many mortgage brokers and banks rely on this tool to get you to sign up for their services. The problem with these tools is that they are not specific enough to you. To get an actual specific calculation for you, the mortgage broker will need the following information:

• Employer statements
• Salary statement
• Income & bonuses & perks
• Allowances
• 30% Ruling status
• Debts
• Marital status
• Alimony
• Financial information of your partner
• Immigration status & Time spent inside or outside NL
• Information about the property

Also, certain banks and lenders have special conditions for which you may or may not qualify. For instance, a lender may demand you live in the Netherlands for at least two years. Keep in mind these details about you and your partner influence whether or not you get a mortgage and how much it is. Also, certain debts have more of an impact on your maximum mortgage amount than others.

Debts & Loans Reduce Your Maximum Mortgage – Watch Out for These

Yup, you heard that correctly; having debts or loans affects your maximum mortgage. There are loads of types of debts and loans, from student loans to other mortgages to consumer loans. Overdraft protection (lines of credit) can also impact your mortgage application or reduce your obligation. People go out and lease a car, not realizing that it can affect your mortgage application. One thing to note is that loans or debts in Germany, Italy, and Belgium can be seen by Dutch institutions as these countries have agreements for this sort of thing.

BKR – Bureau Krediet Registratie

All loans in The Netherlands are registered at a central location called the BKR. This list is accessible by any financial institution to see what other debts and loans you may have. Also, keep in mind that if you have defaulted on a loan (not paid, even as small as a cellphone plan), this can affect your ability to get a loan for up to 5 years; it’s a sort of “blacklist”. So, if you have had a negative BKR rating, it’s important to provide a good explanation to your mortgage advisor. Again, wherever your loans may be worldwide or local, be sure you can pay your bills. Financial stress is one of the worst kinds of stress.

Transparency with Your Spouse or Partner if Buying Together

In the Netherlands, when married, you both automatically assume the mortgage when purchasing a house. There is no such thing as “in his” or “in her” name only (unless having separated assets notary deed). So, when the bank or lender provides a mortgage, they need to be sure that you are able to assume the mortgage together. This is why it is important to understand where you and your spouse are, seeing as buying a property as a couple can be more difficult.

Gifts and Presents, A Curse or a Blessing

Many internationals who move to The Netherlands may be unable to afford to buy a house on their own, so a parent or family member may help them with a gift. It will be important to show the lender that this is a gift with a signed document from the donor. This proves to the lender that the money is, in fact, a gift and not a loan.

Starting a Business…Timing is Critical

In today’s whirlwind of economic change and opportunity, it’s no wonder that many folks are pondering a leap from their nine-to-five gigs into the enticing world of entrepreneurship. But before you dive headfirst into your business dreams, here’s a savvy tip: apply for a mortgage while you’re still employed. Why? Because banks see you as a safer bet when you’ve got that steady paycheck. They tend to be skeptical about new businesses, wanting to see at least one to three years of financial history to ensure stability. So, whether you’re dreaming of starting a media empire or a graphic design firm, securing a mortgage now usually gives you a better chance of buying a house.

Read Also: Buying a House as a Couple in The Netherlands

Reducing Your Entrepreneurial Tax Burden is a Slippery Slope

Also, remember that the mortgage you can eventually get as an entrepreneur will be linked to the company’s profitability. So, some entrepreneurs prefer to invest more and rack up costs in their business to reduce their tax burden, which will, in turn, reduce their income and, hence, decrease their mortgage.

Be on Good Terms With Your Employer – Temporary Contracts

If you have a temporary contract, it will be important to ask your employer for a statement indicating they would like to give you a permanent one (intention for an indefinite contract). So, being on good terms with your employer can go a long way.

Convicted of a Crime? – KYC (Know Your Customer Clauses of the banks and lenders)

When applying for a mortgage, it’s crucial to understand the Know Your Client (KYC) process, where banks conduct a global database check to verify your identity. This process ensures that your name isn’t linked to any legal issues, such as fraud or other serious offences. In the Netherlands, banks also utilize a fraud register to track financial misconduct, like document falsification, which can severely impact your mortgage prospects. Being listed here can alert other banks, deterring them from approving your application for up to eight years. To avoid complications, ensure all your documents are accurate and truthful from the start.

Insane Valuations Can Lead to Rejection

In mortgage applications, overestimating property value can throw a wrench in the works. This often occurs during the bidding process, where expectations and excitement might inflate the perceived worth of a house. However, when the official valuation report comes back lower than anticipated, it could lead to significant issues, especially if there needs to be more personal funds to bridge the gap. To avoid such pitfalls, having a solid team on your side is crucial. Engaging experienced financial advisors and real estate agents can ensure that property valuations are realistic and aligned with market conditions. Their expertise can help you navigate the buying process smoothly and prevent the disappointment and financial strain of overvaluation.

Conclusion

In conclusion, navigating the Dutch mortgage application process requires a commitment to honesty, meticulous attention to document accuracy, and a realistic approach to property valuations. These factors are crucial to securing a mortgage without unexpected hurdles. For personalized advice and to ensure you do not mess up the mortgage application process, reach out to M/V Works International. Their expertise has been invaluable in crafting this guide, and they stand ready to assist you in achieving your homeownership dreams. Contact them today to take the next step confidently.